AMD starts cutting jobs, but without a viable roadmap it has no chance of survival

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The job cuts that AMD CEO Rory Read promised a few weeks back have now begun. AMD has closed its Operating System Research Center (OSRC) in Dresden, Germany. The programmers at the OSRC were responsible for a number of code improvements to Linux, as well as for supporting features like PowerNow and Turbo Core. AMD was 17th on the Top 20 list of Linux kernel contributors through version 3.2, with 2,510 accepted changes or roughly 1% of the total. The OSRC was also apparently working on virtualization support in Linux 3.6.

From 2008-2010 the group was quite active, with a number of presentations and papers on multi-core and many-core processing, thread synchronization, transaction locks, and various improvements to AMD’s hardware virtualization support. Public disclosure on these initiatives appears to have ended in 2010; it’s unclear if the company was still pursuing these lines of research under the radar.

Obviously AMD has to make cuts somewhere, and having just fired some 1500 people last year, it’s safe to assume the company has long since trimmed the easy fat. Nonetheless, these types of choices make us uneasy. True, they fit with Read’s declaration that the company’s future is in reusable IP and semi-custom work, but that attitude doesn’t give us much reason to think AMD will continue to offer a unique value proposition.

Consider x86-64 (aka AMD64). It’s a poster child for how AMD was able to build a standard that now dominates the x86 computing industry, but it didn’t happen overnight. AMD64 began as an alternative to Intel’s IA-64 (Itanium) instruction set. It was announced in 1999, the full specification was finished in 2000, and the first CPU that could use it arrived in 2003.

In July 2010, Microsoft announced that the number of PCs using a 64-bit version of Windows had finally broken the 50% barrier. That means it took a decade for AMD64 to go from an idea to the status quo. In 2009/10, AMD was clearly working on some of the same concepts that Intel plans to debut in Haswell next year, like transactional extensions and lock-free programming. I’m not saying Read personally killed those initiatives — the company stopped publishing its work on them long before he was hired — but it’s an example of an area where AMD was doing cutting-edge work, and apparently isn’t anymore.

Painful cuts underline need for new communication strategy

AMD’s stock price is stuck at $2.00 in part because investors aren’t satisfied with vague promises about semi-custom SoCs, a more agile AMD, and future viability. Instead of trying to bury doubters in an avalanche of optimism, Read and his executive team need to stand up, acknowledge the real impact their changes will have on AMD, and take a page from Dirk Meyer’s playbook.

Meyer, in retrospect, clearly made mistakes with Bulldozer’s design, but his tenure at AMD was marked by a return to fundamentally timely roadmap execution. Phenom II, Thuban, the Radeon 4000 and 5000 family, and the various server updates all dropped when he said they would. The one exception to this was Llano, which was pushed back due to manufacturing problems at GlobalFoundries. Even in that case, Meyer was able to soften the impact by bringing Brazos forward. Llano ultimately did meet its revised launch period, though supplies remained tightly constricted through 2011.

AMD’s new desktop roadmap looks like this. Richland is a simple Trinity refresh.

AMD’s current roadmap is a shambles. Kabini is set to launch in the first half of next year, but the follow-up APU to Trinity, codenamed Kaveri, hasn’t taped out yet. AMD still won’t admit that it’s manufacturing Kabini at TSMC. There’s no information on whether or not Socket AM3+ has a future beyond the recently launched Piledriver CPUs, or if the company will bring Kaveri’s CPU (Steamroller) to market as a standalone server/enthusiast part.

The problem here is that, devoid of an overarching explanation, AMD looks like it’s flailing. The only way for Read & Co to stabilize analyst perceptions of the company is to explain, in detail, why certain departments are being closed, explain what products are being prioritized, and which are not, and when the new products are going to ship. Then ship them, on time.

If the computer market was healthy, AMD might have more room to maneuver, but Q3 system sales fell a whopping 9% year-on-year. That’s the biggest decline in over a decade and it’s not expected to reverse in the fourth quarter. Macroeconomic indicators remain weak and Read’s own forecasts don’t predict a return to profitability until late 2013 or early 2014. A clear, well-executed roadmap is one of the few cards AMD could play.

If AMD executives don’t step forward to preemptively own the layoff narrative, it’ll be written piecemeal. Since the only people left at AMD are the ones working in key areas, layoffs that affect those areas will be seen as crippling to the company’s chances of recovery. Once that stone starts rolling, it won’t matter if Read had a tenable plan or not.

Update: We’ve heard from Michael Silverman at AMD, who requested that we add the following:

” As consequence and as part of a global reduction in workforce, AMD GmbH is closing its operations in Dresden, including its Operating System Research Center (OSRC) as part of a full site closure at this location. However, AMD will continue to support the Linux kernel, and the software development work happening at the OSRC is being consolidated and will be performed at other AMD locations. We remain committed to Linux kernel development and the work being done at the OSRC did not represent AMD’s entire Linux resource.”

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anonymous

speaking from experience, AMD has a culture that looks good on paper, but does not translate to the the bottom line. part of the problem is the isolation of employee performance reviews to the sole discretion of direct supervisors, who are themselves clamoring the climb the corporate ladder at anybody’s expense. epic fail. put a fork in it already, they are done.

http://www.facebook.com/Eric.Wright.e Eric Wright

Doubt they are done…

They will be able to shutter locations and still stay afloat with ARM-64 and GPU devices until either the market improves or until they make another leap in technology in x86 or x86-64 CPU’s.

This is analogous to if McDonald’s shut the door on lobby access and cut counter jobs to save ~30%… they’d become another Sonic Drive-In… and they’d be able to return later because they would not fail in the mean time…

Trimming the fat allows them to operate much longer without relying on new income, until such time as reopening those divisions is economically feasible.

Only time will tell… so we might as well wait and see what they do next.

Robert Foy

Considering that they are dropping lot of their Linux stuff, and their CPU’s are a waste of time, I will no longer buy a ATI videocard either. With Valve pushing Steam on Linux, and with nVidia making strides in their Linux drivers, I see no reason to invest in anything AMD. I am a current owner of the ATI 5850 and it’s been good to me on Windows and games, but the future will be nVidia for me because I see Linux becoming better for PC gaming, and nVidia seems to have gotten the memo that their drivers need to be better for linux. Windows isn’t the future for the PC gamer 5 years from now. I want AMD to succeed, but since they aren’t even trying to best Intel in the high performance market, and now cutting a lot of their Linux side of things, they are irrelevant to me.

Jesse Lee

Yes AMD has ZERO Chance of survival. Linux is the Future NOT windows that is correct. Windows 8 will fall like a heavy stone in a deep lake.

Joel Hruska

Call me when Linux runs every DX11, 10, and 9 game flawlessly. Call me when titles ship simultaneously for Linux and Windows.

Steam on Linux is a fine thing. Chance of making a meaningful impact on the market? Low.

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